Money is missing from the petty cash, large discrepancies are showing up in inventories, a soon to be ex-spouse claims bankruptcy, promised assets from a will are missing. These are all common reasons an investigator requests a forensic audit. Every crime leaves some trace; in financial crimes it usually means a digital trail.
Financial crime continues to grow in the digital realm, while in the real world, violent robbery is down according to the 2013 FBI Robbery report. This is the main factor fueling the increase in the use of financial audits. It is where the accounting profession meets the investigation vocation.
Forensic accounting history runs hundreds of years into the past but has dramatically increased in popularity since the 1970’s according to Kristen Dreyer’s “A History of Forensic Accounting.” A large part of the forensic accountant profession is focused on businesses vulnerable to fraud like banking and insurance. Auditors must be disciplined in the business practices of these unique entities. Searching for evidence of fraud, auditors like all investigators must conduct themselves professionally, with a focus on confidentiality, especially when reputations of individuals are at stake.
The forensic audit can be used to find more than just theft of goods or money. It is essential in other aspects of criminal Investigation, including money laundering, a time-tested effective way of pursuing drug cartels and criminal syndicates. Forensic audits are used in cases of professional negligence were the auditor has to take measure of another professional’s work. The forensic audit is also used in marital and family law, bringing clarity to support payments through lifestyle and asset analysis. Not only is the forensic audit a key aspect in catching fraud and financial crime, they are also increasingly being asked to develop procedures and systems that audit committees can put in place to
deter fraud.
Richard Poland